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100% ownership era dawns

Dubai - Investors and entrepreneurs welcomed the law as a confidence-booster heralding a bold new dawn for the business world.

The transformative companies’ law that allows foreign investors full ownership in their onshore businesses will be rolled out across the UAE from tomorrow.

The new Commercial Companies Law, hailed by global investors as a game-changer in the region’s economic landscape, was approved by President His Highness Sheikh Khalifa bin Zayed Al Nahyan in 2020.

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, has said the 100 per cent foreign ownership reform would provide an ideal legislative environment for foreign direct investors to enhance the nation’s competitiveness.

Investors and entrepreneurs welcomed the law as a confidence-booster heralding a bold new dawn for the business world.

Even months before the official implementation of the law effective from June 1, scores of companies have already obtained full ownership rights. Some, including JoyAlukkas Jewellery Group and Malabar Gold and Diamonds had secured 100 per cent ownership licences back in November 2019.

Expected to have a far-reaching positive impact on the investment ecosystem of the UAE, the legislation abolishes the existing mandatory requirement for onshore companies run by non-national investors to have a major UAE shareholder. It also eliminates the requirement of a national as an agent for certain categories of business and abolishes a provision mandating that a company's board needed to be made up of a majority of UAE nationals and chaired by an Emirati.

The latest version of the law brings several additional sectors to its ambit to benefit from the region-first 100 per cent ownership provision.

In March, the UAE’s Ministry of Economy said it was working on a new legislation to include 10 new sectors to the Commercial Companies Law, which allows 100 per cent foreign ownership of onshore companies in the country.

Minister of Economy Abdullah bin Touq Al Marri has said the law reflects the UAE government’s commitment to supporting the economy and enhancing its readiness for the future.

According to the minister, the investment landscape of the UAE has been steadily developing over the past years with the introduction of progressive measures that have earned the nation a coveted position internationally while leading regionally. Going forward, the UAE will have more measures to strengthen the investment landscape and grow investor confidence in priority sectors, he said.

Initially, the UAE planned to roll out the 100 per cent ownership law from December 1, 2020. A previous foreign investment law in 2018 allowed foreigners to own up to 100 per cent of some businesses, and foreigners could already own up to 100 per cent of those registered in designated business parks known as "free zones".

Abdulla Al Saleh, Undersecretary of the UAE’s Ministry of Economy for Foreign Trade and Industry, has said the new Commercial Companies Law would enable investors and business in 10 additional sectors of strategic importance to come under its purview from June 1.

Al Saleh said the cancellation of the national service agent requirement came into force on April 1, and also affirmed that all current and previously licensed businesses in the UAE can amend their statuses according to the new amendments to the commercial companies' law.

“Legislations that have been issued or those that will be enacted soon seek to increase the country’s competitiveness for both local and international investors, and advance business performance. These legislations are not the outcome of a crisis, but follow a clear vision of the country’s economic future envisioned collaboratively by federal, local, and private sector stakeholders,” Al Saleh said.

In 2020, the UAE recorded a 44.2 per cent surge in foreign direct investment (FDI) flow to Dh73 billion year-on-year on the back of a series of region-first reforms, including long-term visa rules.

According to the US-based consultancy firm Kearney, the UAE jumped four places in an index that measures the confidence of foreign investors.

The UAE, ranking 15th, was one of only five countries globally that achieved a higher ranking in 2021 in an increasingly competitive global FDI attraction environment, Kearney said.

Last year saw Dubai in particular recording Dh24.7 billion worth of FDI in 2020 across 455 projects, according to data from the Dubai FDI Monitor released by the Dubai Investment Development Agency. — issacjohn@khaleejtimes.com